Crypto Market Forecast: Week of March 29th 2021

Digital asset markets pulled back and consolidated in the last week, cooling down after a period of bullish price rises in the first half of March with traders taking a wait-and-see approach after an extended period of strong volatility. The Bitcoin price ended the week down by ~4%, while the Ethereum price fell by ~6% and Binance Coin (BNB) rose by 1%.

Bullish fundamental announcements late in the week failed to move the needle This included news that financial service giant Fidelity has applied with the SEC to launch a Bitcoin Exchange Traded Fund (ETF).

Data from the bitcoin futures market shows a slide in total aggregated open interest since a peak was hit on March 14th. The total traded volumes of Bitcoin futures have also cooled, dropping slightly in March and April after rising aggressively every month between September and February— a five-month period where futures volume trading grew by 541%. Bitcoin options followed a similar trajectory. After growing aggressively through the second half of 2020 volume has flattened and growth has been static over the last two months.

Another sign the market may have topped is signals sent by BTC funding rates. The funding rate for perpetual swaps spiked on March 16th after rising steadily since the beginning of February. A high positive funding rate indicates there is a glut of leveraged longs in the market and going long is an overcrowded trade. Since that peak was hit, the funding rate has dropped by at least 10% on most popular crypto perpetual swap exchanges. This suggests that a number of longs have either been liquidated since March 16th or fewer long orders are being posted because bulls are circumspect about the next short-term price move.

The Relative Strength Indicator (RSI) is also pointing to Bitcoin being overbought and due for a correction. RSI is a momentum indicator based on average gains during a specific time period. Bitcoin’s monthly RSI currently sits at just under 90. A general rule of thumb is that an RSI above sitting above 70 indicates an asset due for a correction. Nonetheless, some argue BTC is a special asset and as analyst PlanB points out on Twitter, during previous bull runs the Bitcoin price has kept rising upwards despite RSI hitting as high as 95.

Crypto news for the week ahead

31st March- Decentralized Block generation on Cardano

This Wednesday, Cardano (ADA) is set to hit a predefined landmark where the percentage of blockchain transactions by the original set of federated genesis nodes hits 0. This will mean that the responsibility for block generation will be fully decentralized. The blog post announcing the event states that following the fully decentralized block production, fees on the network are set to drop. The ADA price is up ~3930% in the last year.

31st March- Ecomi (OMI) goes live on Uniswap

Singapore-based ECOMI is a tech company focused on the digital collectibles space and building custody solutions to keep digital assets safe. This week its native token OMI launches on Uniswap. The price of OMI has risen ~1% in the last week and ~330% in the last month benefiting from the rising popularity of digital collectibles and non-fungible tokens (NFTs).

Top 10 Crypto Summary

It was a mixed week for assets in BNC’s market cap top 10. Theta token (THETA) emerged as an undeniable winner and alpha performer during the last week, rising ~40%.. It now has a larger market cap than powerhouse tokens like Litecoin (LTC) and Chainlink (LINK). The decentralized video streaming platform is backed by YouTube co-founder Steven Chen and is set to launch the third version of its mainnet in three months.

Bitcoin Price Chart

Bitcoin trading was choppy last week. After threatening to break $57,500 on Tuesday a sharp midweek slump means BTC ends the week in the red. While the price has been inconsistent, fundamental metrics remain consistently positive. Data from blockchain.com indicates that the daily hashrate hit a new all-time daily high of 166.72 million terra hashes per second on March 26th.